Although economic growth ticked up in July, partly on strong activity growth in the ICT sector, it was still hampered by a continued decline in activity in the agriculture sector, which is struggling following a prolonged spell of dry weather, partly due to the El Niño effect. In addition, construction activity slumped notably due to uncertainty caused by the fiscal reform bill, according to a survey conducted by the Central Bank.

In month-on-month terms adjusted for working days, economic activity increased 0.2% in July, matching June’s growth. Annual average growth, meanwhile, slowed to 1.8% in July from 1.9% in June.

FocusEconomics Consensus Forecast panelists expect economic growth of 2.2% in 2019, which is down 0.4 percentage points from last month’s forecast, and 2.6% in 2020.

At its monetary policy meeting on 29 April, the Central Bank of Costa Rica (BCCR) left the monetary policy rate (MPR) unchanged at 1.25%, where it has been since being cut by 25 basis points on 16 March to help mitigate the negative economic effects of the coronavirus pandemic and associated social distancing measures.
This comes after the BCCR estimated on 24 April that the Costa Rican economy would contract 3.6% this year, with the greatest contractions in the second and third quarters, followed by a recovery in 2021 of 2.3%.

Annual economic growth in cyclically-adjusted terms accelerated mildly to 2.7% in February from the revised 2.6% reading in January (previously reported: +2.5% year-on-year).
February’s result was supported by healthy growth in the manufacturing sector and information and communication technology sector.

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